UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-K10-K/A

(Amendment No. 1)

☒   Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Fiscal Year Ended December 31, 2021

or

☐   Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Transition Period from _____ to ______

Commission file number 000-19364

TIVITY HEALTH, INC.

(Exact name of registrant as specified in its charter)

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer," “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

As of June 30, 2021, the last business day of the registrant's most recently completed second fiscal quarter, the aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was approximately $1.2 billion based on the price at which the shares were last sold for such date on The Nasdaq Stock Market LLC.

As of February 17, 2022, 49,823,312 shares of common stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's Proxy Statement for the 2022 Annual Meeting of Stockholders are incorporated by reference into Part III of this Form 10-K.

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Tivity Health, Inc.

Form 10-K10-K/A

Table of Contents

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PART I

Explanatory Note

Tivity Health, Inc. (also referred to herein as the “Company”, “we”, “us” or “our”) filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the “Original Form 10-K”) with the United States Securities and Exchange Commission (the “Commission”) on February 25, 2022. The Company is filing this Amendment No. 1 to the Original Form 10-K (this “Form 10-K/A”) solely for the purpose of including in Part III the information that was to be incorporated by reference from the Company’s definitive proxy statement for its 2022 Annual Meeting of Shareholders, because the Company’s definitive proxy statement will not be filed with the Commission within 120 days after the end of the Company’s fiscal year ended December 31, 2021. This Form 10-K/A hereby amends and restates in their entirety Items 10 through 14 of Part III of the Original Form 10-K. Additionally, this Form 10-K/A hereby amends and restates the cover page of the Original Form 10-K to remove the statement that information is being incorporated by reference from the Company’s definitive proxy statement.

Pursuant to Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), this Form 10-K/A also contains new certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Accordingly, Item 15 of Part IV has also been amended and restated in its entirety to include the currently dated certifications as exhibits, and to reference the consolidated financial statements previously filed with the Original Form 10-K. Because no consolidated financial statements have been included in this Form 10-K/A and this Form 10-K/A does not contain or amend any disclosure with respect to Items 307 and 308 of Regulation S‑K, paragraphs 3, 4 and 5 of the certifications have been omitted.

No attempt has been made in this Form 10-K/A to modify or update the other disclosures presented in the Original Form 10‑K, including, without limitation, the consolidated financial statements. This Form 10-K/A does not reflect events occurring after the filing of the Original Form 10-K or modify or update the disclosures in the Original Form 10-K, except as set forth in this Form 10-K/A, and should be read in conjunction with the Original Form 10-K and the Company’s other filings with the Commission. Terms used but not defined herein are as defined in our Original Form 10-K.  As used throughout this Annual Report on Form 10-K (this “Report”), unless the context otherwise indicates, the terms “we,” “us,” “our,” “Tivity Health,” or the “Company” refer collectively to Tivity Health, Inc. and its wholly owned subsidiaries.

Cautionary Statement Regarding Forward-Looking Statements

The Company cautions that certain information contained or incorporated by reference in this Report and our other filings with the Commission, in our press releases, and in statements made by or with the approval of authorized personnel is forward-looking information that involves risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements contained herein. Forward-looking statements discuss our current expectations and projections relating to our financial conditions, results of operations, plans, objectives, future performance, and business. Forward‑looking statements are typically identified by words or phrases such as “may,” “will,” “would,” “can,” “should,” “likely,” “anticipate,” “potential,” “estimate,” “pro forma,” “continue,” “expect,” “project,” “intend,” “seek,” “plan,” “believe,” “target,” “outlook,” “forecast,” the negatives thereof and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. Forward-looking statements include all statements that do not relate solely to historical or current facts, including statements regarding our expectations, intentions, or strategies and regarding the future. We disclaim any intent or obligation to update these forward-looking statements.

PART III

Item 1. Business10. Directors, Executive Officers and Corporate Governance

OverviewThe directors of the Company are as follows:

*Tivity Health, Inc.Ms. Russell andMr. Sanfilippo were appointed to the Board in connection with a cooperation agreement the Company entered into with HG Vora Capital Management, LLC (“HG Vora”) on February 25, 2020 (the “Company”“HG Vora Agreement”).  Pursuant to the HG Vora Agreement, HG Vora had the right to appoint two individuals (“New Directors”) to the Board with a term expiring at the 2020 Annual Meeting of Stockholders. HG Vora appointed Mr. Sanfilippo and Ms. Russell, each of whom was re-elected at the 2020 Annual Meeting of Stockholders. During the term of the HG Vora Agreement, at least one New Director was to serve on each of the Audit Committee of the Board, the Strategic Review Committee of the Board (dissolved in April 2020), was founded and incorporatedthe CEO Search Committee (dissolved upon Mr. Ashworth’s appointment as President and CEO). The HG Vora Agreement expired pursuant to its terms in Delaware in 1981.  We are a leading provider of healthy life-changing solutions, including SilverSneakers^®, Prime^® Fitness, and WholeHealth Living^®. We help adults improve their health and support them on life’s journey by providing access to in-person and virtual physical activity, social engagement, and mental enrichment programs. We deliver resources that enable members to live healthier, happier, more connected lives. Our solutions support health plans and employers nationwide as they seek to reduce costs and improve health outcomes.  January 2021.

We offer SilverSneakersExecutive Officers

Pursuant to approximately 18 million eligible membersGeneral Instruction G(3) of Medicare Advantage, Medicare Supplement,Form 10-K, information concerning our executive officers is included in Part I of the Original Form 10-K, under the caption "Information about our Executive Officers."

Corporate Governance

Delinquent Section 16(a) Reports

Section 16(a) of the Exchange Act requires our officers and group retiree plans.  We also offer Prime Fitness,directors, and persons who own more than 10% of a fitness facility access program, through commercial health plans, employers,registered class of our equity securities, to file reports of ownership and changes in ownership with the Commission.  Officers, directors, and greater than 10% stockholders are required by regulation of the Commission to furnish us with copies of all Section 16(a) forms they file.

Based solely on a review of the Forms 3, 4, and 5 and amendments thereto and certain written representations furnished to us, to our knowledge, all Section 16 reporting requirements applicable to our officers, directors and greater than 10% beneficial owners were complied with during 2021, except for (i) late Form 3 filings for Messrs. Lewis and Bilbao filed on April 13, 2021 related to each of them being designated as Section 16 officers of the Company effective March 31, 2021; and (ii) late Form 4 filings for Messrs. Holland, Lewis, Bilbao, and Wagers on November 12, 2021 related to a certification by the Compensation Committee on February 3, 2021 that certain performance metrics under previously granted performance stock units had been satisfied.  

Code of Conduct

Our Code of Business Conduct applies to all employees (including officers) and non-employee directors (collectively, “colleagues”).  The purpose of the Code of Business Conduct is to provide written standards that are reasonably designed to promote: honest and ethical conduct; full, fair, accurate, timely and understandable disclosure in reports and documents we file with the Commission and other sponsoring organizations.  Our national networkpublic communications we make; compliance with applicable governmental laws, rules and regulations; prompt internal reporting of fitness centers delivers both SilverSneakersviolations of the Code of Business Conduct; and Prime Fitness.  At December 31, 2021,accountability for adherence to the Code of Business Conduct, and to deter wrongdoing.  A copy of our SilverSneakers fitness network encompassed approximately 16,000 locations.  In January 2022, we launchedCode of Business Conduct, as well as any amendments thereto, is available on our website at www.tivityhealth.com. We intend to post any waiver of a customizable, premium fitness network for SilverSneakers that increasedprovision of the Code of Business Conduct granted to any principal executive, financial, or accounting officer or any material amendment to the Code of Business Conduct on our total SilverSneakers fitness networkwebsite. We did not grant any waivers to approximately 23,000 locations. We also offer virtual fitness experiences, including live instructor-led classes.  Through our WholeHealth Living program, which we sell primarily to health plans, we offer a continuumthe Code of services related to physical and integrative medicine.  Our WholeHealth Living network includes relationships with approximately 29,000 physical and integrative medicine practitioner locations to serve individuals through health plans and employers who seek health services such as chiropractic care, acupuncture, physical therapy, occupational therapy, massage therapy, and more.  

The Company is headquartered at 701 Cool Springs Boulevard, Franklin, Tennessee 37067.

COVID-19Business Conduct in 2021.

COVID-19,Audit Committee

During 2021, the global pandemic first recognized byAudit Committee was composed of Mss. Jacob and Russell for the U.S. Department of Health and Human Services (“HHS”) asentire year.  In addition, Dr. Peter Hudson was a national public health emergency in January 2020, continues to spread throughout the United States and other countries. Many federal, state, and local governments recommended and mandated precautions to mitigate the spread of COVID-19, including ordering closure of certain businesses and imposing stay-at-home orders, social distancing guidelines, mask mandates, and vaccine requirements for individuals. Such measures resulted in reduced demand for many businesses. Although many of these restrictions have been eased across the United States, some restrictions remain in place, and new restrictions may be adopted as the pandemic evolves and new variant strains of COVID-19 emerge.

By March 31, 2020, substantially allmember of the fitness centers in our national network were temporarily closed, which had an adverse impact on our results of operations for the first quarter of 2020 and beyond because a significant portion of revenuesAudit Committee from our SilverSneakers program is based on member visits to a fitness partner location.  Some locations began reopening in May 2020 and additional locations reopened in June and throughout the remainder of 2020. SilverSneakers in-person visits totaled 46.0 million and 58.4 million for 2020 and 2021, respectively.  In addition, while the number of active subscribers for Prime Fitness declined from April through December 2020, as of December 31, 2021, the number of active subscribers had increased slightly since the beginning of the year until the 2021.   Annual Meeting of Stockholders (at which time he did not stand for re-election to the Board), and Mr. Sanfilippo has been a member of the Audit Committee since the 2021 Annual Meeting of Stockholders.  It was chaired by Ms. Russell. All of the directors on the Audit Committee are “independent directors” as defined under the Nasdaq listing standards, and satisfy the heightened independence criteria applicable to members of the Audit Committee under the Nasdaq listing standards and Rule 10A-3(b)(1) under the Exchange Act.  We are unable to predict with certainty how manyhave at least one member of our fitness partner locations will be subject to any operational restrictionsthe Audit Committee who has past employment experience in finance or accounting and requisite professional certification in accounting or other comparable experience that results in the futureindividual’s financial sophistication.  The Board has determined that each of Ms. Russell and for what duration, orMr. Sanfilippo qualifies as an “audit committee financial expert”, as defined by the level of member participation at our fitness partner locations.  

As fitness locations closed as a resultregulations of the pandemic, we quickly adaptedCommission.  The Audit Committee meets with our independent registered public accounting firm and management to the changing needs ofreview our members and clients by launching a new and dynamic suite of virtual offerings beginning in March 2020, which we will continue to offer.  Virtual visits were 1.7 million and 3.4 million for 2020 and 2021, respectively.  We believe these digital offerings not only allow our currently homebound members to stay active and connected with the help

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of SilverSneakers but that they will also be a critical contributor to our new digitally-enabled member engagement platform going forward.

Customer and Partner Contracts

Except for Prime Fitness, our customer contracts generally have initial terms of approximately three years.  Some contracts allow the customer to terminate early and/or determine on an annual basis to which of their members they will offer our programs.  For Prime Fitness, our contracts with commercial health plans, employers, and other sponsoring organizations generally have initial terms of approximately three years, while individuals who purchase the Prime Fitness program through these organizations may cancel at any time (on a monthly basis) after an initial period of one to three months.  Our fitness partner location contracts generally have initial terms ranging from one to three years and auto-renew for successive one-year renewal terms.

Business Strategy

Our strategy is to enable healthier, happier and more connected lives as a digital platform engagement company that not only provides in-person and virtual fitness, social engagement and mental enrichment opportunities, but also an insights-driven, personalized experience.  Our goal is to increase the number of eligible and enrolled SilverSneakers members and broaden engagement through strong health plan partnerships, a robust national network of approximately 23,000 fitness locations, live-with-instructor and on-demand virtual classes, and non-fitness activities that support social connection and lifelong learning. We will also focus on increasing the number of subscribers to Prime Fitness, targeting adults aged 18-64 who are members of sponsoring organizations, through our national network of approximately 12,500 participating locations and our daily live streaming classes. In addition, we plan to accelerate growth in our WholeHealth Living offering through market share expansion and improved technology.  

Disposition of our Nutrition Business

Effective as of December 9, 2020, we completed the sale of Nutrisystem, Inc. (“Nutrisystem”), a wholly owned

subsidiary of the Company that included the Nutrisystem® and South Beach Diet® programs, to KNS Acquisition Corp. (“Kainos”) pursuant to terms of a Stock Purchase Agreement (the “Purchase Agreement”), dated October 18, 2020, by and among the Company, Kainos, and Kainos NS Holdings LP. At the closing (the “Closing”) of the transactions contemplated by the Purchase Agreement (the “Transactions”), Nutrisystem and its subsidiaries were acquired by, and became wholly owned subsidiaries of, Kainos. Pursuant to the terms of the Purchase Agreement, Kainos paid to the Company an aggregate purchase price, after giving effect to customary indebtedness and cash adjustments, of approximately $559 million, which amount was subject to a customary working capital adjustment post-Closing. Such working capital adjustment was finalized in the second quarter of 2021 and resulted in $2.7 million of additional proceeds. We used the significant majority of the net proceeds from the divestiture to pay down principal on the term loans under our Prior Credit Agreement (as defined below).  Results of operations for Nutrisystem have been classified as discontinued operations for all periods presented in the consolidated financial statements.

Segment and Major Customer Information

Following the sale of Nutrisystem in December 2020, we have one operating and reportable segment.  

During 2021, our top three customers, including Humana, Inc. (“Humana”), together comprised 40% of our revenues from continuing operations. Our primary contract with Humana continues through December 31, 2022.  See Note 18of the notes to consolidated financial statements, includedthe quality and integrity of our accounting, auditing and financial reporting process, and our systems of internal controls.  The Audit Committee’s Charter, which is reviewed annually by the Audit Committee and is available on our website at www.tivityhealth.com, provides a detailed description of the Audit Committee’s duties and responsibilities.

Item 11. Executive Compensation

COMPENSATION DISCUSSION AND ANALYSIS

EXECUTIVE SUMMARY

In 2021, our Named Executive Officers (“NEOs”) were as follows:

Key Compensation Actions for 2021

The Committee believes that the Company’s 2021 executive compensation program was effective in this report relatingattracting, retaining, and providing appropriate incentives for our NEOs.  After considering the positive say-on-pay vote received from our stockholders at the 2021 Annual Meeting of Stockholders regarding our 2020 executive compensation program, input from our independent compensation consultant Frederic W. Cook & Co., Inc. (“FW Cook”), pay relative to revenues from external customersthe market and customer concentration.

Competition

The healthcarethe 2021 Peer Group (if applicable), and fitness industries are highly competitive and best practices, the manner in which services are provided is subjectCommittee made the following key decisions with respect to continual change. Other entities, whose financial and marketing resources may exceed our resources, may choose to initiate or expand programs in competition with our offerings.executive compensation for 2021:

We believe we have certain advantages over our competitors such as:

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The Committee is committed to designing and maintaining an executive compensation program that is performance-based, competitive, and clear in its design and objectives, and that aligns the interests of management with those of the Company’s stockholders.  The Committee considers the results of the previous year’s “say-on-pay” advisory vote on executive compensation and other feedback the Company

receives from its stockholders in determining the Company’s executive compensation policies and decisions.  

Summary of Compensation Practices

Below are the key features of our executive compensation program that we believe drive sustainable results, encourage executive retention, and align executive and stockholder interests.  We also highlight certain practices we do not do because we believe they do not align with our stockholders’ long-term interests.

Impact of Say-on-Pay Vote Results

At the 2021 Annual Meeting of Stockholders, 76.8% of the shares that were actually voted on the proposal to approve the compensation of the Company’s NEOs were in support of our executive compensation program as disclosed in the proxy statement relating to that meeting. The Committee has considered the outcome of the vote on executive compensation and believes it affirms our stockholders’ support of our overall approach to executive compensation. Accordingly, we have endeavored, to the extent possible in light of the changes in our business and our senior leadership and evaluation of the Company’s strategy, to maintain that overall approach to executive compensation.

The Committee’s Processes and Analyses

Role of Compensation Committee

The Committee sets and administers the policies that govern compensation of our executive officers, including:

However, we cannot assure you that we can compete effectively with other entities who provide similar services.

Industry Integration and Consolidation

Consolidation remains an important factor in all aspectsOnly independent directors serve on the Committee. Based on the Committee’s charter, the Committee may delegate any of the healthcare industry.  While we believe the size of our membership base provides us with the economies of scale to compete even in a consolidating market, we cannot assure you that we can effectively compete with companies formed as a result of industry consolidation or that we can retain existing customers if they are acquired by other entities that already have or contract for programs similar to ours or are not interested in our programs.

Governmental Regulation

Governmental regulation impacts us in a number of ways in addition to those regulatory risks presented under Item 1A. “Risk Factors” below.

Health Reform

In recent years, Congress and certain state governments have passed a large number of laws and regulations intended to result in major changes within the healthcare system. The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the “ACA”), the most prominent of these efforts, changes how healthcare services are covered, delivered, and reimbursed through, among other things, expanded health insurance coverage, reduced growth in Medicare program spending, the establishment of programs that tie reimbursement to care quality and value, and private sector health insurance reforms. For example, the ACA established uniform minimum medical loss ratios (“MLRs”) for health plans, requiring a minimum percentage of health coverage premium revenue to be spent on healthcare medical costs and quality improvement expenses.

The ACA has been subject to legislative and regulatory changes. For example, effective January 2019, Congress eliminated the financial penalty associated with the ACA’s individual mandate. This change resulted in legal challenges to the constitutionality of the individual mandate and validity of the ACA as a whole. However, in June 2021, the U.S. Supreme Court determined that the plaintiffs lacked standing, allowing the law to remain in place. Nonetheless, the elimination of the individual mandate penalty may impact the number of individuals that elect to obtain public or private health insurance or the scope of such coverage, if purchased.

The current presidential administration has indicated that it generally intends to protect and strengthen the ACA, but there is uncertainty regarding the ongoing net effect of the ACA due to the potential for changes to the law, its implementation, and its interpretation. There is also uncertainty regarding the potential impact of other health reform efforts at the federal and state levels. For example, beginning in 2020, the Creating High-quality Results and Outcomes Necessary to Improve Chronic (CHRONIC) Care Act of 2018 (“Chronic Care Act”) allows Medicare Advantage plans to cover supplemental benefits that are not primarily health-related, but that have the reasonable expectation of improving or maintaining health. Additionally, some members of Congress have proposed measures that would expand government-sponsored coverage, including single-payor proposals (often referred to as "Medicare for All").

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Other Laws

While many of the governmental and regulatory requirements affecting healthcare delivery generally do not directly apply to us, our customers must comply with a variety of regulations including those governing Medicare Advantage plans and their marketing and the licensing and reimbursement requirements of federal, state and local agencies. Certain of our services, including health service utilization management and certain claims payment functions, require licensure by state government agencies. We are subjectresponsibilities to a variety of legal requirements in order to obtain and maintain such licenses.

Federal privacy regulations issued pursuant to the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) extensively restrict the use and disclosure of individually-identifiable health information by health plans, most healthcare providers, and certain other entities (collectively, “covered entities”). Federal security regulations issued pursuant to HIPAA require covered entities to implement and maintain administrative, physical and technical safeguards to protect the confidentiality, integrity and availability of electronic individually-identifiable health information. Because we handle individually-identifiable health information on behalf of covered entities, we are considered a "business associate" and are required to comply with most aspects of the HIPAA privacy and security regulations. Violations of HIPAA and its implementing regulations may result in criminal penalties and in substantial civil penalties for each violation. These penalties are updated annually based on changes to the consumer price index.

In the event of a data breach involving individually-identifiable health information, we are subject to contractual obligations and state and federal requirements that require us to notify our customers. These requirements may also require us or our customers to notify affected individuals, regulatory agencies, and the media of the data breach. Under HIPAA, non-permitted uses and disclosures of unsecured individually identifiable health information are presumed to be breaches for which notice is required, unless it can be demonstrated that there is a low probability the information has been compromised.

In addition, there are numerous other laws and legislative and regulatory initiatives at the federal and state levels addressing the confidentiality and security of confidential personal information that may apply to us directly or contractually. These laws vary, are subject to frequent changes and updates in regulations, and could impose additional penalties and other legal liability. For example, the potential effects of the CCPA and CPRA (as defined under Item 1A “Risk Factors”) are far-reaching and may require us to modify our data processing practices and policies and to incur substantial costs and expenses in an effort to comply. In addition, the Federal Trade Commission uses its consumer protection authority to initiate enforcement actions in response to data use and data breaches. If we fail to comply with these or other applicable laws and regulations, we could be subject to liabilities, including civil penalties, money damages, and criminal penalties.

Federal law contains various prohibitions related to false statements and false claims, some of which apply to private payors as well as federal programs. Our contracts with Medicare Advantage plans may subject us to a number of obligations, including billing and reimbursement requirements, prohibitions on fraudulent and abusive conduct and related training and screening obligations. Actions may be brought under the federal False Claims Act by the government as well as by private individuals, known as “whistleblowers,” who are permitted to share in any settlement or judgment. Liability under the federal False Claims Act arises when an entity knowingly submits a false claim for reimbursement to the federal government. The federal False Claims Act defines the term “knowingly” broadly. There are many other potential bases for liability under the federal False Claims Act, including knowingly and improperly avoiding repayment of an overpayment received from the government and the knowing failure to report and return an overpayment within 60 days of identifying the overpayment. The submission of claims for services or items generated in violation of certain “fraud and abuse” provisions of the Social Security Act, including the anti-kickback provisions, constitutes a false or fraudulent claim under the federal False Claims Act. In some cases, whistleblowers, the federal government, and some courts have taken the position that entities that allegedly have violated other statutes, such as the federal self-referral prohibition commonly known as the Stark Law, have thereby submitted false claims under the federal False Claims Act.

From time to time, participants in the healthcare industry, including the Company and our customers, may be subject to actions under the federal False Claims Act or other fraud and abuse laws, including similar state statutes, and it is not possible to predict the impact of such actions. Violations of applicable laws may result in significant civil and criminal penalties. For example, violations of the federal False Claims Act may result in penalties of three times

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the actual damages sustained by the government, plus substantial mandatory civil penalties for each separate false claim. These penalties are updated annually based on changes to the consumer price index.

Because of the international operations previously conducted as part of our total population health services (“TPHS”) business that we sold to Sharecare, Inc. (“Sharecare”) in July 2016, we were subject to the U.S. Foreign Corrupt Practices Act (the “FCPA”) and similar anti-bribery laws of other countries in which we provided services prior to the sale. The FCPA and similar antibribery laws generally prohibit companies and their intermediaries from making improper payments to government officials or other third parties for the purpose of obtaining or retaining business or gaining any business advantage. Failure to comply with the FCPA and similar legislation prior to the sale of our TPHS business could result in the imposition of civil or criminal fines and penalties.

Intellectual Property

We own numerous trademarks and other proprietary rights that are important to our business. Depending upon the jurisdiction, trademarks are validsubcommittee as long as theysuch subcommittee is solely composed of one or more members of the Committee.  The Committee may also delegate to one or more executive officers the authority to make grants of equity-based awards to individuals who are used in the regular course of trade and/or their registrations are properly maintained. We believe the protection of our trademarks, copyrights, domain names, trade dress,not executive officers.

Executive Compensation Philosophy and trade secrets is important to our success. We protect our intellectual property rights by relying on a combination of watch services and trademark, copyright, trade dress and trade secret laws, and through the domain name dispute resolution system.

Human Capital Resources

Employee Profile

As of February 21, 2022, we had approximately 380 employees, comprised of approximately 35% male and 65% female.  Of our total employees, approximately 50% were assigned to our office in Chandler, Arizona, 10% were assigned to our office in Franklin, Tennessee, and the remaining 40% were based off-campus within the United States.  Throughout 2021, however, the majority of our employees worked primarily from their homes. We believe we have good relationships with our employees, and we encourage open and candid communication to ensure we maintain positive relationships, connectivity, and engagement.

Health and Safety

Objectives

We seek to attract, retain, and motivate talented individuals who are committed to the healthCompany’s mission and safetycore values.  The Committee is committed to designing and maintaining an executive compensation program that is performance-based, competitive, clear in its design and objectives, and aligns the interests of our employees.  We have implemented health and safety policies and practices, taking into account CDC guidance and any applicable state or local requirements, to reduce the transmission of COVID-19, including adopting flexible work-from-home arrangements, imposing travel restrictions, promoting social distancing, and cleaning protocols at our two office locations.  Employees who choose to be in the office must either provide proof of vaccination or wear a mask, and attendance at in-person meetings requires proof of vaccination or a negative COVID-19 test.

Diversity and Inclusion

We embrace diversity and inclusion and believe in creating an inclusive and equitable environment that represents a broad spectrum of backgrounds and cultures.  Our CEO has pledged his commitment to the CEO Action for Diversity & Inclusion^TM, which outlines a specific set of actions the CEO will take to cultivate a trusting environment where all ideas are welcomed, and employees feel comfortable and empowered to have discussions about diversity and inclusion.  To further this effort and in addition to our existing communication vehicles, we have created a diversity and inclusion council, which includes internally- and externally-focused committees; launched a diversity-focused listening series; and conducted unconscious bias training sessionsmanagement with all employees, including as partthose of the on-boarding program for new employees. With the assistance of our diversity and inclusion council, we continue to explore additional diversity and inclusion initiatives, and we provide regular updates to our Board of Directors.

Employee Engagement

We regularly conduct anonymous surveys to seek feedback from our employees on a variety of topics, including but not limited to, confidence in Company leadership, competitiveness of our compensation and benefits package, career growth opportunities and improvements on how we could make our Company an employer of

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choice. The results are shared with the entire organization and are reviewedCompany’s stockholders by senior leadership, who analyze areas of progress or deterioration and prioritize actions and activities in response to this feedback to drive meaningful improvements in employee engagement.  We have also established regular communication between the CEO and employees.  Finally, we monitor employee turnover, with a particular emphasis on regretted turnover, and conduct exit interviews with departing employees.

Available Information

Our Internet address is www.tivityhealth.com. We make available free of charge, on or through our Internet website, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and proxy statements, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (the “SEC”). The SEC maintains an Internet site that contains periodic reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov.  A copy of the Tivity Health, Inc. Annual Report on Form 10-K for 2021 filed with the SEC is also available fromrewarding executive officers when the Company (without exhibits) at no charge. These requests should be directedachieves financial success.

The Committee believes that performance-based pay is key to Jill Meyer, Vice President – Corporate Communications, or Matt Milanovich, Vice President – Investor Relationsachieving our financial and FP&A, at the Company's corporate office.

Additionally, we webcast via our website our earnings callsstrategic objectives and certain events we participate in or host. We encourage investors and others interested in our company to review the information that we make available on our website.

Item 1A. Risk Factors

In the execution of our business strategy, our operations and financial condition are subject to certain risks.  A summary of certain material risks is provided below, and you should take such risks into account in evaluating any investment decision involving the Company. This section does not describe all risks applicable to us and is intended only as a summary of certain material factors that could impact our operations in the industry in which we operate. Other sectionsmeeting stockholder expectations.  The direct effect of this report contain additional information concerning these and other risks.

Risks Relating to Our Business Generally

The COVID-19 pandemic has had, andperformance-based philosophy is expected to continue to have,that a material adverse effect on our business and results of operations.

As a result of the COVID-19 pandemic, substantially all of the fitness centers in our national network were temporarily closed for portions of 2020, and the average monthly total participation levels of our members after such locations reopened were significantly below historical levels, thus adversely impacting our revenues during 2020.  Participation levels increased during 2021 but remained below pre-pandemic levels. There is considerable uncertainty regarding the extent to which COVID-19 will continue to spread, the emergence of new variants of COVID-19, the development, availability, distribution and effectiveness of vaccines and treatments, and public confidence in such vaccines and treatments, and the extent and duration of measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter-in-place orders, and business and government shutdowns. Although restrictions have eased in most jurisdictions, rates of COVID-19 infection in regions across the United States and the world have remained high in recent months, and some areas have re-imposed some restrictions due to such high rates of COVID-19 cases. As a result, the COVID-19 pandemic has significantly affected, and may continue to affect, overall economic conditions in the United States.

We have faced and may continue to face reclosures and/or long-term closures and other operational restrictions with respect to some or all of our fitness partner locations for prolonged periods of time due to, among other factors, evolving governmental restrictions including public health directives, quarantine policies, or social distancing measures.  Additionally, even if fitness partner locations are open, members may avoid public gathering places because of a perceived risk of infection or risk to health, which could reduce overall demand and adversely impact their use of our services.  Further, members who were unable to participate in our programs due to COVID-19 restrictions or chose not to participate in our programs due to perceived risks related to COVID-19 may not restart active participation in our programs (even in the absence of COVID-19 restrictions or perceived risks related to COVID-19) because they have replaced our programs with another fitness program or otherwise modified or stopped their fitness routine.  Because a significantportion of our revenues from our SilverSneakers program is

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based on member visits to a fitness partner location, this decrease in member participation has affected and could further adversely affect our business and results of operations.

The extent to which COVID-19 continues to affect our results will depend on future developments that are highly uncertain and cannot be predicted, including whether there are additional outbreaks, mutations, variants, or related strains of the virus in locations where we operate, and the availability of, and prevalence of access to, effective medical treatments and vaccines for COVID-19.

Consumer spending generally may also be negatively impacted by adverse general macroeconomic conditions and reduced consumer confidence, including the impacts of any recession resulting from the COVID-19 pandemic. This has negatively impacted, and may further negatively impact, the number of paid subscribers in our Prime Fitness program.

We provide our employees with flexibility to work in the office or from home as business and customer needs allow.  Most employees work from home the majority of the time, which may negatively impact productivitytotal target compensation (excluding benefits and cause other disruptions to our business. We have incurred, and may incur inperquisites) that is set at the future, costs related to implementing our work-from-home program as well as additional cleaning fees and supplies related to the COVID-19 pandemic.  

We are uncertainbeginning of the potentialyear for an NEO is variable.  We consider compensation to be variable if the ultimate value realized may differ from the intended target compensation.  Variable compensation includes both our annual short-term incentive awards and long-term impactsincentive awards.

The Committee strives to align executive compensation with the unique talent and business needs of the COVID-19 pandemic on our business, andCompany, without encouraging excessive or unnecessary risk-taking, through the severity, duration, and timing of the business and economic impacts from the continuing, unprecedented public health effortfollowing objectives:

The Committee strives to contain and combat the spread of COVID-19, which has previously included, and may in the future include, among other things, significant volatility in financial markets and a sharp decrease in the value of equity securities, including our common stock.

Our business strategy relating to the development and introduction of new products and services exposes us to risks such as limited customer and/or market acceptance and additional expenditures that may not result in additional net revenue.

An important component of our business strategy is to focus on new products and services that enable us to provide immediate value to our customers.  We cannot predict whether customers and/or the market will accept these new products and services, and if we fail to execute successfully on this strategy or to adapt this strategy as market conditions evolve, our ability to grow revenue and our results of operations may be adversely affected.

If we fail to successfully implement our business strategy, our financial performance and our growth could be materially and adversely affected.

Our future financial performance and success are dependent in large part upon our ability to implement our business strategy successfully. Implementation of our strategy will require effective management of our operational, financial and human resources and will place significant demands on those resources. See Part I, Item 1. “Business – Business Strategy" in this report for more information regarding our business strategy.  There are risks involved in pursuing our strategy, including the ability to hire or retain the personnel necessary to manage our strategy effectively.

In addition to the risks set forth above, implementation of our business strategy could be affected by a number of factors beyond our control, such as epidemics and pandemics, including the ongoing COVID-19 pandemic (including responses of governmental authorities to contain such epidemics and pandemics), increased competition, legal developments, government regulation, general economic conditions (including rates of inflation), increased operating costs or expenses, and changes in industry trends. We may decide to alter or discontinue certain aspects of our business strategy at any time. If we are not able to implement our business strategy successfully, our long-term growth and profitability may be adversely affected. Even if we are able to implement some or all of the initiatives of our business strategy successfully, our operating results may not improve to the extent we anticipate, or at all.

We may experience difficulties associated with the implementation and/or integration of new businesses, services (including outsourced services), technologies, solutions, or products.

We may face difficulties, costs, and delays in effectively implementing and/or integrating acquired businesses, services (including outsourced services), technologies, solutions, or products into our business.  Implementing

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internally-developed solutions and products, and/or integrating newly acquired businesses, services (including outsourced services), and technologies could be time-consuming and may strain our resources. Consequently, we may not be successful in implementing and/or integrating these new businesses, services, technologies, solutions, or products and may not achieve anticipated revenue and cost benefits.

Changes in macroeconomic conditions and certain market risks may adversely affect our business.

Economic difficulties and other macroeconomic conditions (including rates of inflation or any downturn or recession) could reduce the demand and/or the timing of purchases for certain of our services from customers and potential customers.  In addition, changes in economic conditions could create liquidity and credit constraints. We cannot assure you that we would be able to secure additional financing if needed and, if such funds were available, that the terms and conditions would be acceptable to us.

Legislative, regulatory, and legal developments involving taxes could adversely affect our business and results of operations.

We are subject to U.S. federal and state income, payroll, property, sales and use, and other types of taxes in numerous jurisdictions. Significant judgment is required in determining our provisions for income taxes. Changes in tax rates, enactments of new tax laws, revisions of tax regulations, and claims or litigation with taxing authorities could result in substantially higher taxes. For example, governmental tax authorities are increasingly scrutinizing the tax positions of companies, and the Biden administration has proposed several corporate tax increases, including raising the U.S. corporate income tax rate, which, if enacted, could adversely affect our tax provision, cash tax liability, and effective tax rate.

Certain of our interest rate swap agreements do not qualify for hedge accounting treatment, which may result in volatility in our U.S. GAAP earnings.

We maintain five interest rate swap agreements that do not qualify for hedge accounting treatment (“de-designated swaps”). At December 31, 2021, the de-designated swaps had current notional amounts totaling $266.7 million. The de-designated swaps are recorded at their estimated fair value in the consolidated balance sheet, with changes in fair value recognized each period in current earnings.  Such changes may result in volatility in our U.S. GAAP earnings and may adversely affect the price of our common stock.

The Sharecare Equity Security is subject to certain risks and could experience volatility or losses.

As described in Note 12 of the notes to the consolidated financial statements, in July 2021, we received 11,079,331 shares of Sharecare Common Stock as a result of the Sharecare Transaction. The Sharecare Equity Security is subject to restrictions on resale, including a customary lockup period, and is subject to certain economic and financial market risks.  The timing and amount of cash proceeds from any potential disposition of all or a portion of the Sharecare Equity Security following the expiration of the lockup period is uncertain.  The risk of volatility or loss associated with the Sharecare Equity Security could be increased during periods of instability in financial markets and economic conditions, such as the COVID-19 pandemic.

Since July 2021, we carry the Sharecare Equity Security on our consolidated balance sheet at fair value, and we recognize any changes in fair value of the Sharecare Equity Security in net income as unrealized gains or losses, as required under ASC 321. Changes in the fair value of the Sharecare Equity Security could have a material adverse effect on the Company’s results of operations and financial condition.

We cannot guarantee that our stock repurchase program will be fully implemented or that it will enhance long-term stockholder value.

In September 2021, our board of directors approved a new stock repurchase program authorizing the repurchase of up to $100 million of our common stock. The repurchase program does not have an expiration date, and we are not obligated to repurchase a specified number or dollar value of shares, on any particular timetable or at all. There can be no assurance that we will repurchase stock at favorable prices. The stock repurchase program may be modified, suspended, or terminated at any time and, even if fully implemented, may not enhance long-term stockholder value.

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We have a significant amount of goodwill and intangible assets, the value of which could become further impaired.

We have recorded significant portions of the purchase price of certain acquisitions as goodwill and/or intangible assets. We review goodwill and intangible assets not subject to amortization for impairment on an annual basis (during the fourth quarter) or more frequently whenever events or circumstances indicate that the carrying value may not be recoverable. The COVID-19 pandemic has had and is having an adverse impact on the overall economy, resulting in rapidly changing market and economic conditions that have impacted the Company.  In March 2020, we experienced a significant decline in the Company’s market capitalization and in our actual and forecasted operating results, in addition to the unfavorable change in market conditions.  As a result, management concluded that there were triggering events during the first quarter of 2020 necessitating an impairment evaluation of our goodwill and indefinite-lived intangible assets (which consist of the Nutrisystem tradename and the SilverSneakers tradename).  Following these evaluations, we recorded adesign total impairment loss of $199.5 million related to the Nutrisystem goodwill and tradename during the first quarter of 2020, which amount is reflected in loss from discontinued operations.  We determined there was no impairment related to the SilverSneakers tradename or the carrying value of goodwill related to continuing operations.  During the third and fourth quarters of 2020, we recorded additional impairment losses of $66.2 million and $24.0 million related to the Nutrition business, each of which is reflected in loss from discontinued operations. At December 31, 2021, we had approximately $334.7 million and $29.0 million of goodwill and intangible assets, respectively, remaining.  If we determine that the carrying values of our goodwill and/or intangible assets related to continuing operations should be impaired, we may incur non-cash charges to earnings, which could have a material adverse effect on our results of continuing operations for the period in which the impairment occurs.

In order to be successful, we must attract, engage, retain and integrate key employees and have adequate succession plans in place, and failure to do so could have an adverse effect on our ability to manage our business.

Our success depends, in large part, on our ability to attract, engage, retain and integrate qualified executives and other key employees throughout all areas of our business. Identifying, developing internally or hiring externally, training and retaining highly skilled managerial and other personnel are critical to our future, and competition for experienced employees can be intense. Failure to successfully recruit executives and key employees or the loss of any executives and key employees could have a significant impact on our operations. The loss of services of any key personnel, the inability to retain and attract qualified personnel in the future, or delays in hiring may harm our business and results of operations. Further, changes in our management team may be disruptive to our business, and any failure to successfully integrate key newly hired employees could adversely affect our business and results of operations.

We face competition for staffing, which may increase our labor costs and reduce profitability.

We compete with other healthcare and services providers in recruiting qualified management, including executives with the required skills and experience to operate and grow our business, and staff personnel for the day-to-day operations of our business. These challenges may require us to enhance wages and benefits to recruit and retain qualified management and other professionals. A shortage of qualified personnel or changes in the labor market could also require higher wages that would increase our labor costs. Difficulties in attracting and retaining qualified management and other professionals, or in controlling labor costs, could have a material adverse effect on our profitability.

We are or may become a party to litigation that could potentially force us to pay significant damages and/or harm our reputation.

We are subject to certain legal proceedings, which potentially involve large claims and significant defense costs (see Note 11 of the notes to consolidated financial statements included in this report). These legal proceedings and any other claims that we may face in the future, whether with or without merit, could result in costly litigation, and divert the time, attention, and resources of our management. The coverage limits of our insurance policies may not be adequate to cover all such claims and some claims may not be covered by insurance. Additionally, insurance coverage with respect to some claims against us or our directors and officers may not be available on terms that would be favorable to us.  The cost of such coverage has increased in recent years and could further increase in the future.  Further, although we believe that we have conducted our operations in compliance with applicable

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statutory and contractual requirements and that we have meritorious defenses to outstanding claims, it is possible that resolution of these legal matters could have a material adverse effect on our results of operations.  In addition, legal expenses associated with the defense of these matters may be material to our results of operations in a particular financial reporting period.

Damage to our reputation could harm our business, including our competitive position and business prospects.

Our ability to attract and retain customers, members and employees is impacted by our reputation. Harm to our reputation can arise from various sources, including employee misconduct, cyber security breaches, unethical behavior, litigation or regulatory outcomes, which could, among other consequences, increase the size and number of litigation claims and damages asserted or subject us to enforcement actions, fines and penalties and cause us to incur related costs and expenses.

Our results of operations could be adversely affected by severe or unexpected weather, epidemics, pandemics or outbreaks of disease, hostilities, violent crime, or social unrest.

Adverse weather conditions or other extreme changes in the weather may cause people to refrain, or prevent people, from visiting fitness partner locations and using our services.  Additionally, widespread health epidemics or outbreaks of disease, such as influenza or COVID-19, may cause members to avoid public gathering places and negatively impact their use of our services.  Further, real or perceived safety issues related to hostilities, violent crime or social unrest may cause people to refrain from visiting fitness partner locations. As some of the fees that we charge our customers are based on member participation, a decrease in member participation could adversely affect our business and results of operations.

If our customers or fitness center partners experience financial distress, or seek to change or delay payment terms, it could negatively affect our financial position and results.

At any given time, one or more of our customers or fitness center partners may experience financial difficulty, file for bankruptcy protection or go out of business. Unfavorable economic and financial conditions, such as the current events surrounding the COVID-19 pandemic, could result in an increase in our customers’ or fitness center partners’ financial difficulties that then affect us.  The direct impact on us could include reduced revenues and write-offs of accounts receivable and could negatively impact our operating cash flow. While we currently cannot estimate what those effects will be, if they are severe, the indirect impact could include impairments of intangible assets and reduced liquidity, among others.

If our efforts to attract and retain paying subscribers for our Prime Fitness program are not successful, our business will be adversely affected.

Our ability to continue to attract paying subscribers for our Prime Fitness program will depend in part on our ability to offer convenience and value to our Prime Fitness subscribers and our partners’ ability to effectively market the program. Our ability to attract and retain paying subscribers may be adversely affected by our competitors' relative offerings, pricing, and other factors, as well as other fitness programs (including digital offerings) in the marketplace. If our Prime Fitness subscribers do not perceive our products to be of value, we may not be able to attract and retain Prime Fitness subscribers. Additionally, COVID-19 has adversely impacted and may continue to adversely impact our ability to attract and retain subscribers for our Prime Fitness program. We must continually add new Prime Fitness paying subscribers both to replace canceled subscriptions and to grow our Prime Fitness program beyond our current subscriber base. Further, if excessive numbers of our Prime Fitness subscribers cancel their subscriptions, in connection with COVID-19 or otherwise, our results of operations will be adversely affected.

Increased focus from investors and other stakeholders regarding environmental, social or governance practices could result in additional costs, regulation or risks and adversely impact our reputation, employee recruiting and retention, and willingness of consumers and merchants to do business with us.

Investor advocacy groups, certain institutional investors, investment funds, other market participants, stockholders, regulators and customers have focused increasingly on the environmental, social and governance (“ESG”) practices of companies. These parties have placed increased importance on the implications of the social

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cost of their investments. The Nominating and Corporate Governance Committee of our Board of Directors oversees our ESG practices, initiatives, and reporting, including those related to environmental sustainability, social and ethical issues, human capital management, responsible sourcing, and community engagement, as well as the Company’s commitment to diversity, equity, and inclusion.  In addition, our internal ESG committee, comprised of executives and subject matter experts from across the Company, meets quarterly to provide leadership and accountabilitycompensation opportunities for the Company’s ESG policy, strategies,executives that are competitive, but not excessive, as compared to market practice.  Market practice is generally defined as median compensation levels found among companies of comparable size and efforts business relative to integrate such initiatives into our business.

If our ESG practices do not meet (or are viewed as not meeting) investor or other industry or regulatory stakeholder expectations and standards, which continue to evolve, our brand, reputation and employee retentionthe Company.  Individual compensation targets may be negatively impacted, includingabove or below market based on an assessment of our ESG oversight and practices. It is possible that stakeholders may not be satisfied with our ESG practices or the speed of their adoption. We could also incur additional costs and require additional resources to monitor, report, implement, enhance and comply with various ESG practices and standards. Also, our failure, or perceived failure, to meet the standards included in any ESG disclosure could negatively impact our reputation, employee recruiting and retention, and the willingness of our customers and suppliers to do business with us.

We could be adversely affected by violations of the FCPA and similar anti-bribery laws of other countries in which we provided services prior to the sale of our TPHS business.

Because of the international operations that we previously conducted as part of our TPHS business that we sold to Sharecare, Inc. in July 2016, we could be adversely affected by violations of the FCPA and similar anti-bribery laws of other countries in which we provided services prior to the sale. The FCPA and similar anti-bribery laws generally prohibit companies and their intermediaries from making improper payments to government officials or other third parties for the purpose of obtaining or retaining business or gaining any business advantage. While our policies mandated compliance with these anti-bribery laws, we cannot provide assurance that our internal control policies and procedures always protected us from reckless or criminal acts committed by our employees, contractors or agents. Failure to comply with the FCPA and similar legislation prior to the sale of our TPHS business could result in the imposition of civil or criminal fines and penalties and could disrupt our business and adversely affect our results of operations, cash flows and financial condition.

Risks Relating to the Healthcare Industry

A significant percentage of our revenues is derived from health plan customers.

A significant percentage of our revenues is derived from health plan customers. The health plan industry may continue to consolidate, and we cannot assure you that we will be able to retain health plan customers, or continue to provide our products and services to such health plan customers on terms at least as favorable to us as currently provided, particularly if they are acquired by other health plans that already participate in competing programs or are not interested in our programs. Increasing vertical integration efforts involving health plans and healthcare providers or entities that provide wellness services may increase these challenges. Our health plan customers that are part of larger healthcare enterprises may have greater bargaining power, which may lead to further pressure on the prices for our products and services. In addition, a reduction in the number of covered lives enrolled with our health plan customers or in the payments we receive could adversely affect our results of operations. Our health plan customers are subject to continuing competition and reduced reimbursement rates from governmental and private sources, which could lead current or prospective customers to seek reduced fees or choose to reduce or delay the purchase of our services. Finally, health plan customers could offer (and in some cases are offering) services themselves that compete directly with our offerings, stop providing our offerings to certain or all of their members (as one of our customers, United Healthcare, has done), or offer fitness benefits in addition to SilverSneakers and Prime Fitness, which could adversely affect our business and results of operations.

We currently derive a significant percentage of our revenues from three customers.

During 2021, our top three customers, including Humana, together comprised 40% of our revenues from continuing operations. Our primary contract with Humana continues through December 31, 2022 and does not allow the customer to terminate for convenience prior to the expiration of the contract. The loss or restructuring of a contract with any of our top three customers or any of our other significant customers could have a material adverse effect on our business and results of operations.  

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Our inability to renew and/or maintain contracts with our customers and/or fitness partner locations under existing terms or restructure these contracts under favorable terms could adversely affect our business and results of operations.

If our customers and/or fitness partner locations choose not to renew their contracts with us (which occurs from time to time), our business and results of operations could be materially adversely affected.  Loss of a significant fitness partner or health plan customer or a reduction in a health plan customer's enrolled lives (including as a result of increased unemployment and the resulting loss of or change in health insurance coverage) could have a material adverse effect on our business and results of operations.  In addition, a restructuring of a contract with a health plan customer and/or fitness partner on terms that aren’t favorable to us could adversely affect our business and results of operations. Moreover, the businesses of our fitness partner locations have been and will likely continue to be adversely affected by the closure of locations, any public health directives, or social distancing measures applicable upon reopening of locations and reduced overall consumer demand for fitness center use as a result of the COVID-19 pandemic.  If a significant portion of our fitness partner network is unable to return to normal operations within a reasonable period of time as a result of financial or operational stresses brought on by the COVID-19 pandemic, we may be unable to make alternative arrangements with substitute fitness partners on favorable terms or at all.

Reductions in Medicare Advantage health plan reimbursement rates or changes in plan designs may negatively impact our business and results of operations.

A significant portion of our revenue is indirectly derived from the monthly premium payments paid by the U.S. Department of Health and Human Services to our health plan customers for services they provide to Medicare Advantage beneficiaries.  As a result, our results of operations are, in part, dependent on government funding levels for Medicare Advantage programs. Any changes that limit or reduce Medicare Advantage reimbursement levels, such as reductions in or limitations of reimbursement amounts or rates under these programs, reductions in funding of these programs, expansion of benefits without adequate funding, elimination of coverage for certain benefits, or elimination of coverage affecting the services that we provide, could have a material adverse effect on our health plan customers, and as a result, on our business and results of operations.

Compliance with existing or newly adopted federal and state laws and regulations or new or revised interpretations of such requirements could adversely affect our results of operations or may require us to spend substantial amounts, and the failure to comply with applicable laws and regulations could subject us to penalties or negatively impact our ability to provide services.

Our customers are subject to considerable state and federal government regulation, and a substantial majority of our business involves providing services to Medicare Advantage beneficiaries. As a result, we are subject directly to various federal laws and regulations, including the federal False Claims Act, billing and reimbursement requirements and other provisions related to fraud and abuse. In addition, our contracts with Medicare Advantage plans require us to comply with a number of regulatory provisions and to permit these health plan customers to perform compliance audits of our processes and programs. Many of these regulations are vaguely written and subject to differing interpretations that may, in certain cases, result in unintended consequences that could impact our ability to effectively deliver services. Further, we are required to comply with most requirements of the HIPAA privacy and security laws and regulations and may be subject to criminal or civil penalties for violations of these regulations. Certain of our services, including health utilization management and certain claims payment functions, require licensure and may be regulated by government agencies. We are subject to a variety of legal requirements in order to obtain and maintain such licenses, but little guidance is available to determine the scope of some of these requirements.

We continually monitor the extent to which federal and state legislation and regulations govern our operations. New federal or state laws or regulations or new interpretations of existing requirements that affect our operations could have a material adverse effect on our results of operations. If we are found to have violated applicable laws, to have caused any of our customers to submit false claims or make false statements, or to have failed to comply with our contractual compliance obligations, we could be required to restructure our operations, be subject to contractual penalties, including termination of our customer agreements, and be subject to significant civil and criminal penalties.

Healthcare reform efforts may result in a reduction to our revenues from government health programs and private insurance companies or otherwise directly or indirectly impact our business.

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The healthcare industry is subject to various political, regulatory, scientific, and technological influences. Efforts at federal and state levels of government have resulted in laws and regulations intended to effect significant change within the healthcare system. The ACA, the most prominent of these efforts, affects coverage, delivery, and reimbursement of healthcare services. Among other effects, several of its provisions may increase the costs and/or reduce the revenues of our customers or prospective customers. For example, the ACA eliminates pre-existing condition exclusions by commercial health plans, bans annual benefit limits, and mandates minimum medical loss ratios for health plans.

The ACA has been subject to legislative and regulatory changes. For example, effective January 2019, Congress eliminated the penalty associated with the ACA’s individual mandate. This change resulted in legal challenges to the constitutionality of the individual mandate and validity of the ACA as a whole. However, in June 2021, the U.S. Supreme Court determined that the plaintiffs lacked standing, allowing the law to remain in place. Nonetheless, the elimination of the individual mandate penalty may impact the number of individuals that elect to obtain public or private health insurance or the scope of such coverage. There is uncertainty regarding whether, when and how the ACA will be further changed and how the law will be interpreted and implemented, but the current presidential administration has indicated that it generally intends to protect and strengthen the ACA. There is also uncertainty regarding the potential impact of other legislative and regulatory health reform efforts at the federal and state levels. For example, the Chronic Care Act of 2018 allows Medicare Advantage plans, starting in 2020, to cover supplemental benefits that are not primarily health-related, but that have the reasonable expectation of improving or maintaining health. Additionally, some members of Congress have proposed measures that would expand government-sponsored coverage, including single-payor proposals (often referred to as "Medicare for All"). It is possible that the reforms imposed by the ACA, in its current form or through future changes or interpretations, or other health reform initiatives will adversely affect the profitability of our customers and cause our customers or prospective customers to reduce or delay the purchase of our services or to demand reduced fees. Because of this uncertainty and many other variables, including the difficulty of predicting the impact of various health reform initiatives on other healthcare industry participants, we are unable to predict all of the ways in which the ACA and other health reform efforts could impact us.

Risks Relating to Information Technology, Data Privacy and Intellectual Property

A failure of our information technology or systems could adversely affect our business.

Our ability to deliver our products and services depends on effectively using information technology.  We rely upon our information technology and systems, employees, and third parties for operating and monitoring all major aspects of our business. These technologies and systems and, therefore, our operations could be damaged or interrupted by natural disasters, power loss, network failure, improper operation by our employees, challenges maintaining and facilitating the interface of various systems with one another, failures to adequately manage implementations of new technology, updates or enhancements of such platforms or interfaces, data privacy or security breaches, computer viruses, computer hacking, network penetration or other illegal intrusions, epidemics or pandemics (such as the COVID-19 pandemic), or other unexpected events. Any disruption in the operation of our information technology or systems, regardless of the cause, could adversely impact our operations, which may adversely affect our financial condition, results of operations and cash flows.

A cybersecurity incident could result in the loss of confidential data, give rise to remediation and other expenses, expose us to liability under HIPAA, consumer protection laws, common law theories or other laws, subject us to litigation and federal and state governmental inquiries, damage our reputation, and otherwise be disruptive to our business.

The nature of our business involves the receipt, storage and use of personal data about the participants in our programs, including individually identifiable health information, as well as employees and customers. Additionally, we rely upon third parties that are not directly under our control to store and use portions of that personal data as well.  The secure maintenance of this and other confidential information or other proprietary information is critical to our business operations. To protect our information systems from attack, damage and unauthorized use or disclosure and combat these risks, we have implemented multiple layers of security, including technical safeguards, processes and policies, and training for our people. We have also purchased cyber liability insurance. Our defenses are monitored and routinely tested internally and by external parties. In addition, we are Health

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Information Trust Alliance (“HITRUST”) certified, which enables us to demonstrate compliance with industry-defined risk management and data protection requirements based on a standardized framework. Despite these efforts, threats from malicious persons and groups, ransomware incidents, new vulnerabilities, technology failures, and advanced attacks against information systems create risk of cybersecurity incidents, which are rapidly evolving and increasingly sophisticated. The preventive actions we take to reduce the risk of cybersecurity incidents and protect our systems and data may not be sufficient in the future. Personnel error or malfeasance, faulty password management, social engineering or other vulnerabilities and irregularities may also result in a defeat of our or our third-party service providers' security measures and a breach of our or their information systems. Hardware, software, cloud services, or applications we use may have inherent vulnerabilities or defects of design, manufacture or operations or could be inadvertently or intentionally implemented or used in a manner that could compromise information security. In addition, our vulnerability to security incidents or attacks may be heightened as an increased number of employees work from home or remotely. Therefore, we cannot provide assurance that we or our third-party vendors or other service providers will not be subject to cybersecurity incidents or occurrences, which may result in unauthorized access by third parties, loss, modification, misappropriation, disclosure or corruption of customer, employee, or our information; member protected health information; or other data subject to privacy laws, or that otherwise disable or degrade our systems, disrupt our customers’ experience and our ability to efficiently operate our business. In addition, COVID-19 may have an adverse impact on our information technology systems and our ability to securely preserve confidential information as well as our ability to protect against attacks and detect and respond to them quickly, including as a result of telecommuting issues associated with our employees working remotely. The rapid adoption of some third-party services designed to enable the transition to a remote workforce also may introduce security risk that is not fully mitigated prior to the use of these services. Moreover, because the techniques used in cyber-attacks change frequently and may not be immediately recognized, we may experience security breaches that remain undetected for an extended time. Cybersecurity incidents or delays in responding to or remedying damage caused by such incidents may lead to a disruption in our systems or business, costs to modify, enhance, or remediate our cybersecurity measures, liability under privacy, security and consumer protection laws or litigation under these or other laws, including common law theories, and subject us to enforcement actions, fines, regulatory proceedings or litigation against us, damage to our business reputation, a reduction in participation and sales of our products and services, and legal obligations to notify customers or other affected individuals about an incident, which could cause us to incur substantial costs and negative publicity, any of which could have a material adverse effect on our financial condition and results of operations and harm our business reputation.following factors:

Cybersecurity and the continued development and enhancement of our controls, processes and practices remain a priority for us. We may be required to expend significant additional resources in our efforts to modify or enhance our protective measures against evolving threats or to investigate and remediate any cybersecurity vulnerabilities.

Our business is subject to new and changing federal and state privacy and security laws, rules, and regulations, which impact our operating costs and for which failure to adhere could negatively impact our business.

Our business is subject to various federal and state privacy and data security laws, rules, and regulations. Some state laws and regulations may be inconsistent across jurisdictions and subject to evolving and differing (sometimes conflicting) interpretations and applications. While we are using internal and external resources to monitor compliance with and to continue to modify our data practices and policies in order to comply with evolving privacy laws, relevant regulatory authorities could determine that our data practices fail to address all the requirements of certain new or changing laws, which could subject us to penalties and/or litigation. Government regulators, privacy advocates and class action attorneys are increasingly scrutinizing how companies collect, process, use, store, share and transmit personal data. For example, the California Consumer Privacy Act of 2018 (“CCPA”), went into effect on January 1, 2020, and it applies broadly to information that identifies or is associated with any California household or individual, and compliance with the new law requires that we implement several operational changes, including processes to respond to individuals’ requests. Moreover, the California Privacy Rights Act (“CPRA”), which significantly modifies the CCPA, will take effect January 1, 2023. Moreover, Virginia and Colorado also passed comprehensive privacy legislation, and several other states, as well as federal lawmakers, have proposed additional legislation. Failure to comply with these laws may result in governmental enforcement actions, private claims, including class action lawsuits, and damage to our reputation. In addition, the CPRA creates a new enforcement agency charged with enforcing the CPRA and imposes additional requirements

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including privacy risk assessments and audits as well as vendor contractual requirements for data sharing, license and access arrangements. The CCPA and CPRA also provide for civil penalties for violations, as well as a private right of action for data breaches that may increase data breach litigation. We may also be exposed to litigation, regulatory fines, penalties or other sanctions if the personal, confidential or proprietary information of our customers is mishandled or misused by any of our suppliers, counterparties or other third parties, or if such third parties do not have appropriate controls in place to protect such personal, confidential or proprietary information. Additionally, the Federal Trade Commission (“FTC”) and many state attorneys general are interpreting federal and state consumer protection laws to impose standards for the collection, use, dissemination and security of data. The obligations imposed by the CCPA, CPRA, the Virginia Consumer Privacy Act, and the Colorado Privacy Act and other similar laws that may be enacted at the federal and state level may require us to modify our business practices and policies and to incur substantial expenditures in order to comply.

Further, our marketing and member engagement activities may be subject to communications privacy laws such as the Telephone Consumer Protection Act, CAN-SPAM Act and FTC and Federal Communications Commission (“FCC”) rules and regulations. While we strive to adhere to strict policies and procedures that comply with such laws and regulations, we may be subjected to class action lawsuit settlements or penalties, and regulators and courts may disagree with our interpretation of these laws and regulations and subject us to penalties and other consequences for noncompliance. Determination by a court or regulatory agency that our marketing practices violate communications privacy laws could subject us to civil penalties and could require us to change some portions of our business. Even an unsuccessful challenge by consumers or regulatory authorities of our activities could result in adverse publicity and could require a costly response from and defense or settlement by us.

It is difficult to predict the impact of new laws, regulations, and policies and the related interpretations, as well as changes in enforcement practices or regulatory scrutiny. Changes in applicable laws, regulations, and policies and the related interpretations and enforcement practices may require extensive system and operational changes, be difficult to implement, increase our operating costs, require significant capital expenditures, or adversely impact the cost or attractiveness of the products or services we offer, or result in adverse publicity and harm our reputation.

Third parties may infringe on our brands, trademarks, and other intellectual property rights, which may have an adverse impact on our business.

We currently rely on a combination of trademark and other intellectual property laws and confidentiality procedures to establish and protect our proprietary rights, including our brands. If we fail to successfully enforce our intellectual property rights, the value of our brands, services and products could be diminished and our business may suffer. Our precautions may not prevent misappropriation of our intellectual property. Any legal action that we may bring to protect our brands and other intellectual property could be unsuccessful and expensive and could divert management’s attention from other business concerns. In addition, legal standards relating to the validity, enforceability and scope of protection of intellectual property, especially in Internet-related businesses, are uncertain and evolving. We cannot assure you that these evolving legal standards will sufficiently protect our intellectual property rights in the future.

We may be subject to intellectual property rights claims.

Third parties may make claims against us alleging infringement of their intellectual property rights. Any intellectual property claims, regardless of merit, could be time-consuming and expensive to litigate or settle and could significantly divert management’s attention from other business concerns. In addition, if we were unable to successfully defend against such claims, we may have to pay damages, stop selling the service or product or stop using the software, technology or content found to be in violation of a third party’s rights, seek a license for the infringing service, product, software, technology, or content or develop alternative non-infringing services, products, software, technology, or content. If we cannot license on reasonable terms, develop alternatives, or stop using the service, product, software, technology, or content for any infringing aspects of our business, we may be forced to limit our service and product offerings. Any of these results could reduce our revenue and our ability to compete effectively, increase our costs or harm our business.

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Risks Relating to our Credit Facility

The performance of our business (as it could further be affected by the COVID-19 pandemic) and the level of our indebtedness could prevent us from meeting the obligations under our Credit Agreement or have an adverse effect on our future financial condition, our ability to raise additional capital, or our ability to react to changes in the economy or our industry.

On June 30, 2021, we entered into a new Credit Agreement (the “Credit Agreement”) with a group of lenders, Morgan Stanley Senior Funding, Inc., as general administrative agent, term loan facility administrative agent and collateral agent (“Morgan Stanley”), and Truist Bank, as revolving facility agent and swingline lender (“Truist”). The Credit Agreement replaced our prior Credit and Guaranty Agreement, dated March 8, 2019 (the “Prior Credit Agreement”), with a group of lenders, Credit Suisse AG, Cayman Islands Branch, as general administrative agent, term facility agent and collateral agent, and Truist, as revolving facility agent and swingline lender. The Credit Agreement provides us with, among other things, a $400.0 million term loan B facility (the “Term Loan B”) and a $100.0 million revolving credit facility.  As of December 31, 2021, outstanding debt under the Credit Agreement was $380.5 million, which represented $394.0 million of principal on the term loan under the Credit Agreement less deferred loan costs and original issue discount.

Our ability to service our indebtedness will depend on our ability to generate cash in the future.  We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available in an amount sufficient to enable us to service our indebtedness or to fund other liquidity needs.  If there are prolonged or worsening effects of the COVID-19 pandemic, such as long-term closures of our fitness partner locations, we could be unable to generate revenues and cash flows sufficient to conduct our business, service our outstanding debt, and comply with the covenants under the Credit Agreement.  This could, among other things, exhaust our available liquidity (and ability to access liquidity sources) and/or result in an acceleration of the maturity of a significant portion or all of our then-outstanding debt obligations, which we may be unable to repay or refinance.

The Credit Agreement contains various affirmative and negative covenants customary for financings of this type that, subject to certain exceptions, impose restrictions and limitations on the Company and certain of the Company’s subsidiaries with respect to, among other things, liens; indebtedness; changes in the nature of business; mergers and other fundamental changes;  sales and other dispositions of assets (including equity interests in subsidiaries); loans, advances, guarantees, acquisitions and other investments; restricted payments (including dividends, distributions, buybacks, redemptions and repurchases with respect to equity interests); change in fiscal year; prepayments, redemptions or acquisitions for value with respect to junior lien, subordinated or unsecured debt; changes in organizational documents and junior debt agreements; negative pledges; restrictions on subsidiary distributions; transfers of material assets to subsidiaries that are not guarantors; and transactions with affiliates.

Our indebtedness could adversely affect our future financial condition or our ability to react to changes in the economy or industry by, among other things:

In addition, actual compensation earned may be above or below market levels depending on the performance of the executive and the Company as a whole.  

We use the following compensation vehicles to meet the above-described objectives:

Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly, and changes in LIBOR reporting practices could lead to an increase in

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the cost of our indebtedness and adversely affect our results of operations.

Borrowings under our Credit Agreement are at variable rates of interest, generally using LIBOR as the benchmark, and expose us to interest rate risk. If interest rates increase, our debt service obligations with respect to our variable rate indebtedness would increase even if the amount borrowed remained the same, and our net income and cash flows would correspondingly decrease.

To mitigate our exposure to future interest rate volatility with respect to our variable rate indebtedness, we have entered into interest rate swaps andThe compensation vehicles may in the future enter into additional interest rate swaps, which involve the exchange of floating for fixed rate interest payments. Considering hedging gains and losses and cash settlement costs, we may not elect to maintain such interest rate swaps, and any swaps may not fully mitigate our interest rate risk.

A transition away from LIBOR as a benchmark for establishing the applicable interest rate may adversely affect our variable rate debt and interest rate swaps.  The Financial Conduct Authority of the United Kingdom has announced that it will no longer require LIBOR submissions, resulting in the possible unavailability or lack of suitability of LIBOR as a benchmark rate. The Alternate Reference Rate Committee, convenedvary by the Board of Governors of the Federal Reserve Systemexecutive based on role, responsibilities, and the New York Federal Reserve Bank, has endorsed the Secured Overnight Financing Rate (“SOFR”) as its preferred replacement benchmark for U.S. dollar LIBOR. While our borrowing arrangements provide for alternative base rates as well as a method for selecting a benchmark replacement for LIBOR, the consequences of LIBOR becoming unavailable or not suitable at some point cannot be predicted with confidence at this time. Use of an alternative base rate or a benchmark replacement for LIBOR as a basis for calculating interest with respect to our outstanding variable rate indebtedness or interest rate swap agreements could lead to an increase in the interest we pay and a corresponding increase in the cost of our indebtedness, and could affect ourexecutive’s ability to refinance someinfluence Company performance and the achievement of key short- and long-term objectives.

On an annual basis, or allmore frequently as needed, the Committee reviews:

The Committee believes that our existing indebtednessexecutive compensation program and governance policies do not encourage our management or otherwisecolleagues to take risks reasonably likely to have a material adverse impacteffect on our business, financial condition and results of operations.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

As of December 31, 2021, we leasedbusiness.  This belief is based on the following facilities:

Item 3. Legal Proceedings

Forfactors: our balance of short- and long-term incentives; our use of different types of equity compensation awards that provide a descriptionbalance of material pending legal proceedings, see Note 11ofincentives; our cap on incentive awards; our recoupment policy (which permits the notesCommittee, in its discretion, to consolidated financial statements included in this report.

Item 4. Mine Safety Disclosures

Not applicable.

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Information about our Executive Officers

The following table sets forth certain information regardingrecover incentive-based compensation from our executive officers asin the event of February 25, 2022.  Executive officersa restatement of our financial results or non-compliance with our Code of Business Conduct to the material detriment of the Company); our anti-hedging and anti-pledging policies; and our stock ownership guidelines.

The Committee also believes that our compensation strategies are aligned with our compensation philosophy, long-term performance, and Company serve atculture, which places significant value on high-performing individuals, and that those strategies promote individual responsibility for collective long-term success of the pleasureCompany.

As discussed in further detail throughout this Compensation Discussion and Analysis section, the Committee believes that the 2021 executive compensation program was reasonable and appropriate.

Setting Compensation

In addition to its annual review of executive compensation, the Committee retains an independent compensation consultant to review the Company’s executive compensation practices.  The Committee has engaged FW Cook since 2013 to provide independent executive compensation advisory services.  The independent compensation consultant reports directly to the Committee and provides no other services to the Company.  The Committee also employs several tools to set executive compensation targets that meet the Company’s objectives, including the following:

Executive Compensation for 2021

Program Elements

The 2021 executive compensation program consisted of:

2021 Peer Group

In late 2020, FW Cook conducted a review of our Boardpeer group in light of Directors.our business and size.  FW Cook applied certain criteria in developing the 2021 Peer Group (as defined below) such as industry sectors, revenues, enterprise value, and our historical peers.  With regard to revenue and enterprise value, FW Cook evaluated comparable companies with revenues ranging from approximately one-fourth to four times our pro-forma annual revenues and favored companies with 12-month average enterprise values ranging from approximately one-fourth to four times our enterprise value.  Our 2021 peer group consists of the following companies (the “2021 Peer Group”), whose compensation levels were used as competitive comparisons when reviewing our NEO compensation for 2021.  

The median revenue for the latest four quarters and the median 12-month average enterprise value as of September 30, 2020 for companies in our 2021 Peer Group were $0.6 million and $1.4 billion, respectively.

Compensation Decisions for 2021

Based on the positive say-on-pay support received from our stockholders at the 2021 Annual Meeting of Stockholders regarding our 2020 executive compensation program, input from our independent compensation consultant FW Cook, and competitive and best practices, the Committee maintained a performance-based compensation philosophy when designing the 2021 executive compensation program.  

The Committee believes that the Company’s 2021 executive compensation program was instrumental in attracting, retaining, and providing appropriate incentives for our NEOs.  The Committee remains committed to designing and maintaining an executive compensation program that is performance-based, competitive, and clear in its design and objectives, and that aligns the interests of management with those of the Company’s stockholders.

In general, and based on the methodology described under the heading “Compensation market data”, the Committee believes compensation levels for the NEOs were appropriate.

Base Salary

In establishing base salaries for 2021, the Committee considered each NEO's performance and responsibilities, recommendations of the CEO, internal pay equity, pay relative to the market, and the date of each NEO’s last salary increase.      

Effective February 22, 2021, each of the NEOs except for Mr. Ashworth received a merit increase in his base salary.  Base salaries for the NEOs were as follows:

Annualized Base Salary ($000s)

Short-term Cash Incentive Awards

We offer short-term cash incentive awards to NEOs to align their annual compensation with the Company’s financial and operational objectives for the current year.  For fiscal year 2021, the performance factor for the short-term cash incentive award was Adjusted EBITDA (weighted 100%). Actual payouts were calculated using the following formula: (Base Salary * Bonus Target Percentage * Performance Factor Achievement). The maximum amount that each NEO could earn for the full year was 200% of target.  Short-term cash incentive awards earned are described in further detail below and were paid in mid-March 2022.

Short-Term Cash Incentive Target Percentages

Short-term cash incentive targets (expressed as a percentage of base salary) were set based on target percentages that correspond with each NEO’s internal job grade and/or market comparisons.  The Committee believes that the short-term cash incentive targets are market competitive and that they establish the appropriate level of at-risk annual cash incentive and drive the achievement of annual performance goals.

Short-term Cash Incentive Targets (as a percentage of base salary)

Adjusted EBITDA (100% of Total Bonus Target)

Generally consistent with 2014 through 2020, the predominant performance metric for short-term cash incentive awards for 2021 was Adjusted EBITDA, which was used as a metric for both earning and funding short-term cash incentive awards (the “Adjusted EBITDA Bonus”).  “Adjusted EBITDA” was defined as earnings from continuing operations before interest, taxes, depreciation, and amortization excluding certain pre-defined costs, losses, and expenses, including but not limited to loss on extinguishment and modification of debt, other income (loss) related to the Company’s investment in Sharecare, Inc., other income (loss) related to mark-to-market adjustments on certain interest rate swaps that do not qualify for hedge accounting treatment, and integration and CEO transition costs.  The Committee believes that Adjusted EBITDA provides a specific measure of operating and financial performance and aligns our executives with our short-term business goals for EBITDA growth.  The Adjusted EBITDA Bonus comprised 100% of each NEO’s total bonus target for 2021.

Each NEO’s Adjusted EBITDA Bonus was based on the Company’s achievement of Adjusted EBITDA from continuing operations.  The short-term cash incentive pool for the NEOs (“NEO Bonus Pool”) began funding when Adjusted EBITDA from continuing operations exceeded $156 million (the “Adjusted EBITDA Threshold”).  The following table outlines the threshold and target Adjusted EBITDA goals, along with the Adjusted EBITDA achieved and the corresponding payout as a percent of target for each NEO.

Based on actual Adjusted EBITDA (before accruing the Adjusted EBITDA Bonus described herein) of $166.1 million for 2021, each NEO earned an Adjusted EBITDA Bonus of 115% of the target applicable to such NEO.  

Short-Term Cash Incentive Payouts for 2021 ($000s)

Long-Term Incentive Awards

The Committee believes that our LTI compensation is a key component of our retention strategy and is integral to our ability to achieve our performance goals.  LTI awards are generally granted annually to eligible employees, including our NEOs.  LTI awards are typically made during the first quarter or shortly thereafter once the Committee has had the opportunity to review the previous year’s full year results, expected performance for the current year, and the Company’s long-range business plan (to the extent a sufficient number of shares is available under the Company’s equity incentive plan).  The Committee may also approve additional equity-based awards in certain special circumstances, such as upon an officer’s initial employment with the Company, the promotion of an officer to a new position or in recognition of special contributions made by an officer.

The table below summarizes the types of long-term incentives granted to the NEOs in recent years intended to incentivize performance and the objective for using each of the incentives in supporting the interests of the stockholders.

Annual Equity Awards

As described above, one of our key compensation objectives is to provide long-term incentive compensation to strengthen and align the interests of our NEOs with those of our stockholders.  Each NEO’s target LTI value was set based on the NEO’s internal job grade and/or market comparisons.  To meet this objective, the Committee designed the LTI program for 2021 such that 50% of the grant date fair value of each eligible NEO’s LTI grant consisted of “premium priced” stock options having an exercise price equal to 110% of the closing price of the Common Stock on the grant date.  The remaining 50% of the grant date fair value of each eligible NEO’s LTI grant consisted of RSUs. Effective March 22, 2021, each NEO except for Mr. Ashworth received an annual equity award. Mr. Ashworth was not eligible for an LTI grant in 2021 due to having received an equity award effective June 2020 granted as compensation for fiscal years 2020 through 2022.  

Stock Ownership and Retention Guidelines

Our stock ownership and retention guidelines require currently employed NEOs to maintain a minimum ownership in the Company’s stock calculated as a multiple of their base salary aligned with their job responsibility (for 2021, at least 3.75 times base salary for Mr. Ashworth, 2.0 times base salary for Messrs. Holland and Lewis, 1.8 times base salary for Mr. Bilbao, and 1.2 times base salary for Mr. Wagers). NEOs must retain 75% of the net number of shares acquired (after payment of exercise price, if any, and taxes) upon the exercise of all stock options and upon the vesting of all RSUs, PSUs, and MSUs granted until they achieve the required multiple of base salary.  NEOs who do not comply with the guidelines may not be eligible for future equity awards.  All of the NEOs are currently in compliance with the guidelines.

401(k) Plan

The Committee believes that an important aspect of attracting and retaining qualified individuals to serve as NEOs involves providing a means to save for retirement.  As part of the Company’s Retirement Savings Plan (the “401(k) Plan”), which is based on a calendar year, during 2021 the Company matched 50 cents of each dollar of a participant’s voluntary salary contributions (up to a maximum of 6% of base salary).  The annual maximum participant voluntary salary contribution, which is established by the Internal Revenue Service, was $19,500 for 2021, plus a “catch-up” contribution limit for those over 50 years old of $6,500.  With respect to the 2021 plan year, all of the Company’s matching contributions were in cash.  Employees are credited with approximately 33% vesting in Company contributions each year during their first three years of service such that after three years of service, employees are fully vested in all prior and future Company matching contributions to the 401(k) Plan.  All of the NEOs were eligible to participate in the 401(k) Plan during 2021.

Severance and Change in Control Benefits

The Committee believes that reasonable severance and change in control benefits are necessary in order to recruit and retain effective executives and compete for executive talent within our industry.  In addition, the Committee also believes that a change in control arrangement provides an appropriate level of security to an executive that will likely reduce the reluctance of that executive to pursue a change in control transaction that could be in the best interests of our stockholders.  Although the Committee independently reviews the potential severance and change in control payments in light of their reasonableness as part of negotiating employment agreements or offer letters with our executive officers, the Committee typically does not consider the value of potential severance and change in control payments when assessing annual compensation because severance payments as a result of a change in control are contingent in nature and have primary purposes unrelated to ordinary compensation.  For a detailed discussion of potential severance and change in control benefits as well as an estimate of the amounts that would have been payable had they been triggered as of the end of 2021, see “Potential Payments Upon Termination or Change in Control of the Company”.

Perquisites and Other Benefits

NEOs are eligible for benefits generally available to and on the same terms as the Company’s employees who are categorized as exempt for purposes of the Fair Labor Standards Act.  Those benefits include health, disability, dental and life insurance. These payments are discussed in the footnotes to the Summary Compensation Table.

Tax Deductibility of Compensation

Prior to the Tax Cuts and Jobs Act enacted in December 2017 (the “Tax Act”), Section 162(m) of the Internal Revenue Code limited the Company’s ability to deduct on its tax return compensation over $1 million to the NEOs, other than the CFO, serving at the end of the year unless, in general, the compensation was paid pursuant to a plan that was performance-related, non-discretionary, and approved by the Company’s stockholders (“performance-based compensation”).

The Tax Act substantially modified Section 162(m) and, among other things, eliminated the performance-based compensation exception to the $1 million deduction limit with respect to taxable years beginning after December 31, 2017.  Accordingly, effective beginning in fiscal 2018, compensation paid to our NEOs (including our CFO) will be subject to the limitations on deductibility under Section 162(m) for any year in which compensation is paid to them (even years following their separation from service), and we will no longer be able to deduct “performance-based compensation” to such officers who receive annual compensation in excess of $1 million.  However, the Tax Act

provides that awards that were made and subject to binding written contracts in effect on November 2, 2017 are “grandfathered” under prior law and can still qualify as deductible “performance-based compensation,” even if paid in future years. The Committee will continue to monitor these awards and Internal Revenue Service guidance to determine whether they are deductible if and when paid.  The Committee has determined, however, that the Company will not necessarily seek to limit executive compensation to amounts deductible under Section 162(m) if the Committee believes such limitation is not in the best interest of the Company’s stockholders. While considering the tax implications of its compensation decisions, the Committee believes its primary focus should be to attract, retain, and motivate executives, and align the executives’ interest with those of the Company’s stockholders.

Compensation Decisions for 2022

For 2022 and beyond, the Committee remains committed to designing and maintaining an executive compensation program that is performance-based, competitive, and clear in its design and objectives, and that aligns the interests of management with those of the Company’s stockholders. The Committee will continue to evaluate the executive compensation program each year in light of market competitiveness and new facts and circumstances to ensure that our executive compensation strategies are aligned with our pay-for-performance compensation philosophy and our business objectives.

2022 Peer Group

In September 2021, FW Cook conducted a review of our peer group.  FW Cook applied certain criteria in developing the 2022 Peer Group (as defined below) such as industry sectors, revenues, enterprise value, and our historical peers.  With regard to revenue and enterprise value, FW Cook evaluated comparable companies with revenues ranging from approximately one-fourth to four times our pro-forma annual revenues and favored companies with 12-month average enterprise values ranging from approximately one-fourth to four times our enterprise value.  Our 2022 peer group consists of the following companies (the “2022 Peer Group”), whose compensation levels were used as competitive comparisons when reviewing our NEO compensation for 2022.  The median revenue for the latest four quarters and the median enterprise value as of August 31, 2021 for companies in our 2022 Peer Group were $0.7 million and $2.2 billion, respectively.

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Following is a summary of compensation decisions with respect to the NEOs for 2022:

PART II

Item 5. Market forRegistrant's Common Equity, Related Stockholder Matters and Issuer Purchases of EquitySecurities

Market Information

OurcommonstockistradedonTheNasdaqGlobal SelectMarket(“Nasdaq”)underthesymbol"TVTY".Base Salaries

PerformanceGraph

In establishing base salaries for 2022, the Committee considered each NEO’s performance and responsibilities, CEO recommendations, internal pay equity, pay relative to the market and the 2022 Peer Group, and date of the last salary increase.  The followinggraphcomparesCommittee determined that the totalstockholder returnof $100 investedonDecember 31, 2016in(a)NEOs’ base salaries would be equal to theCompany, (b) the Nasdaq U.S. StocksBenchmark index and (c) the NasdaqHealth Care index, assuming the reinvestment of all dividends. amounts set forth below effective February 21, 2022:

The stock price performance shown onthis graphisnotnecessarily indicativeoffuture priceperformance.

Holders of Common Stock

At February 17, 2022, there were approximately 11,300 holders of our commonstock, including273 stockholders of record.

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Dividends

We have never declared or paid a cash dividend on our commonstock.  We do not expect to declare or pay any cash dividends in the foreseeable future.Our Board of Directorsreviews our dividend policy from time to time and maydeclare dividends at its discretion; however, our Credit Agreement placesrestrictions on the payment of dividends.For further discussion of the Credit Agreement, see Item 7. "Management's Discussion and Analysisof Financial Condition andResults of Operation- Liquidity and Capital Resources."

Securities Authorized for Issuance Under Equity Compensation Plans

See Part III,Item 12. "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters," for information regarding securities authorized for issuance under ourequity compensation plans, which is incorporated herein by reference.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The stock repurchase activity for the fourth quarter of 2021 was as follows:Annualized Base Salary ($000s)

On September 27, 2021, we announced that our board of directors authorized a $100 million share repurchase program. The program authorizes repurchases from time to time using a variety of methods, including pursuant to a Rule 10b5-1 plan, open market purchases, block trades and privately negotiated transactions, all in compliance with the rules of the United States Securities and Exchange Commission and other applicable legal requirements. The timing and number of shares repurchased is determined by our Board of Directors based on an ongoing assessment of the capital needs of the business, the market price of the Company’s stock, general business and market conditions, and alternative investment opportunities. The repurchase program may be modified or terminated by the Company’s board of directors at any time and does not have an expiration date.

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Item 6. Reserved

Short-Term Incentive Awards

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Item 7. Management's Discussion and AnalysisFor 2022, 80% of Financial Condition and Results of Operations

Please read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes included under Item 8. "Financial Statements and Supplementary Data" of this report.

Overview

Tivity Health, Inc. (the “Company”), was founded and incorporated in Delaware in 1981.  We are a leading provider of healthy life-changing solutions, including SilverSneakers^®, Prime^® Fitness, and WholeHealth Living^®. We help adults improve their health and support them on life’s journey by providing access to in-person and virtual physical activity, social engagement, and mental enrichment programs. We deliver resources that enable members to live healthier, happier, more connected lives. Our solutions support health plans and employers nationwide as they seek to reduce costs and improve health outcomes.  

We offer SilverSneakers to approximately 18 million eligible members of Medicare Advantage, Medicare Supplement, and group retiree plans.  We also offer Prime Fitness, a fitness facility access program, through commercial health plans, employers, and other sponsoring organizations.  Our national network of fitness centers delivers both SilverSneakers and Prime Fitness.  At December 31, 2021, our SilverSneakers fitness network encompassed approximately 16,000 locations.  In January 2022, we launched a customizable, premium fitness network for SilverSneakers that increased our total SilverSneakers fitness network to approximately 23,000 locations. We also offer virtual fitness experiences, including live instructor-led classes.  Through our WholeHealth Living program, which we sell primarily to health plans, we offer a continuum of services related to physical and integrative medicine.  Our WholeHealth Living network includes relationships with approximately 29,000 physical and integrative medicine practitioner locations to serve individuals through health plans and employers who seek health services such as chiropractic care, acupuncture, physical therapy, occupational therapy, massage therapy, and more.  

The Company is headquartered at 701 Cool Springs Boulevard, Franklin, Tennessee 37067.

COVID-19

COVID-19, the global pandemic first recognized by HHS as a national public health emergency in January 2020, continues to spread throughout the United States and other countries.  Substantially all of the fitness centers in our national network were temporarily closed for portions of 2020, and the average monthly total participation levels of our members after such locations reopened were significantly below historical levels, thus adversely impacting our revenues during 2020 because a significant portion of revenues from our SilverSneakers programeach NEO’s short-term incentive target is based on member visitsCompany achievement of financial goals, specifically Adjusted EBITDA.  The remaining 20% of each NEO’s short-term incentive target is based on Company achievement of an operational and strategic goal, specifically virtual visits.  There were no changes to a fitness partner location. Participationany of the NEOs’ individual short-term incentive targets from the levels increased during 2021 but remained below pre-pandemic levels. SilverSneakers in-person visits totaled 58.4 million for 2021, compared to 46.0 million and 104.0 million for 2020 and 2019, respectively.  In addition, whileestablished at the number of active subscribers for Prime Fitness declined from April through December 2020, as of December 31, 2021, the number of active subscribers had increased slightly since the beginningend of 2021.  

Disposition of our Nutrition Business

Effective as of December 9, 2020, we completed the sale of Nutrisystem.  Results of operations for Nutrisystem have been classified as discontinued operations for all periods presented in the consolidated financial statements.

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Forward-Looking Statements

This report contains forward-looking statements, whichThe NEOs’ potential award payouts are based upon current expectations, involve a number of risks and uncertainties, and are subject to the "safe harbor" provisionscapped at 190% of the Private Securities Litigation Reform Acttarget award amount.

Short-Term Incentive Targets for 2022 (as a percentage of 1995. Forward-looking statements include all statements that are not historical statements of fact and those regarding the intent, belief, or expectations of the Company, including, without limitation, all statements regarding the Company's future earnings, revenues, financial condition, business strategies, and results of operations.  Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and that actual results may vary from those in the forward-looking statements as a result of various factors, including, but not limited to:base salary)

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Long-Term Incentive Awards

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We undertake no obligationThe Committee granted annual equity awards in March 2022.  Similar to update or revise any2020 and 2021, the Committee designed the LTI program for 2021 such forward-looking statements.

Critical Accounting Policies

We describe our significant accounting policies in Note 1that 50% of the notesgrant date fair value of each NEO’s LTI grant consisted of “premium priced” stock options having an exercise price equal to 110% of the closing price of the Common Stock on the grant date.  The stock options become exercisable on the third anniversary of the grant date.  The remaining 50% of the grant date fair value of each NEO’s LTI grant consisted of RSUs that are subject to vesting in three equal installments over three years.  Mr. Ashworth was not eligible for an annual LTI grant in 2021 due to having received an equity award in June 2020 granted ascompensation for fiscal years 2020 through 2022.

Special Incentive Bonus Award

On February 11, 2022, the Company entered into a Special Incentive Bonus Award Agreement (the “Special Incentive Bonus Award Agreement”) with Mr. Ashworth, pursuant to which Mr. Ashworth will be entitled to a cash payment in the amount of $5,000,000 on February 11, 2027 (the “Vesting Date”), as long as Mr. Ashworth is serving as an employee of the Company on the Vesting Date.  

If Mr. Ashworth’s employment with the Company is involuntarily terminated by the Company for any reason other than termination for cause, or is terminated by Mr. Ashworth for good reason, then, subject to Mr. Ashworth’s execution of the release of claims in favor of the Company, any portion of the Special Incentive Bonus Award that has not vested prior to the consolidated financial statements.  We preparedate of termination of Mr. Ashworth’s employment will immediately vest. If Mr. Ashworth’s employment with the consolidated financial statementsCompany terminates by reason of death or disability, then any portion of the Special Incentive Bonus Award that has not vested prior to the date of termination of Mr. Ashworth’s employment will immediately vest. If Mr. Ashworth’s employment with the Company is involuntarily terminated for cause or Mr. Ashworth is terminated for any other reason not already described above, then any portion of the Special Incentive Bonus Award that has not vested prior to the date on which Mr. Ashworth’s employment is terminated will immediately be forfeited and Mr. Ashworth shall have no further rights with respect to such Special Incentive Bonus Award. In the event of a change in conformity with generally accepted accounting principles incontrol, the United States (“U.S. GAAP”), which requires us to make estimates and judgments that affectSpecial Incentive Bonus Award will vest as follows: (a) 50% of the reported amounts of assets and liabilities and related disclosures atSpecial Incentive Bonus Award will immediately vest on the date of the financial statementschange in control, and (b) 50% of the reported amountsSpecial Incentive Bonus Award will vest on the first anniversary of revenuesthe date of the change in control.  

Compensation Committee Report

The following Report of the Compensation Committee does not constitute soliciting material and expenses duringshould not be deemed filed for any purpose, including for purposes of Section 18 of the reporting period. Actual results may differ from those estimates.Exchange Act, or otherwise subject to the liabilities of that Section, or incorporated by reference into any other Company filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except to the extent the Company specifically incorporates this Report by reference therein.

We believeThe Compensation Committee has reviewed and discussed the following accounting policies areCompensation Discussion and Analysis section with management and, based on such review and discussions, recommended to the most criticalBoard that the Compensation Discussion and Analysis section be included in understanding the estimates and judgments that are involved in preparing our financial statements and the uncertainties that could impact our results of operations, financial condition, and cash flows.

Revenue Recognitionthis Form 10-K/A.

We account for revenue from contracts with customers in accordance with Accounting Standards Codification (“ASC”) Topic 606 “Revenue from Contracts with Customers” (“ASC Topic 606”).  The unit of account in ASC Topic 606 is a performance obligation, which is a promise in a contract to transfer to a customer either a distinct good or service (or bundle of goods or services) or a series of distinct goods or services provided over a period of time. ASC Topic 606 requires that a contract’s transaction price, which is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, is to be allocated to each performance obligation in the contract based on relative standalone selling prices and recognized as revenue when or as the performance obligation is satisfied.Respectfully submitted,

Bradley S. Karro, Chair

We earn revenue from continuing operations primarily from threeprograms: SilverSneakers senior fitness, Prime Fitness andWholeHealth Living.  We provide the SilverSneakers senior fitness programto membersof MedicareAdvantage, MedicareSupplement, and group retiree plans through our contracts with those plans.  We offer Prime Fitness, a fitness facility access program, through contracts with commercial health plans, employers, and other sponsoring organizations that allow their members to individually purchase the program.  We sell our WholeHealth Living program primarily to health plans.Robert J. Greczyn, Jr.

Erin L. Russell

The significant majority of our customer contracts contain one performance obligation - to stand ready to provide access to our network of fitness locations and fitness programming - which is satisfied over time as services are rendered each month over the contract term.  Unsatisfied performance obligations at the end of a particular month primarily relate to certain monthly memberships for our Prime Fitness program, which are recorded as deferred revenue on the consolidated balance sheet and recognized as revenue during the immediately subsequent month.  There was $0.1 million of revenue recognized during the year ended December 31, 2021 from performance obligations satisfied in a prior period.

Our fees are variable month to month and are generally billed per member per month (“PMPM”) or billed based on a combination of PMPM and member visits to a network location.  We bill PMPM fees by multiplying the contractually negotiated PMPM rate by the number of members eligible for or receiving our services during the month.  We bill for member visits approximately one month in arrears once actual member visits are known.  Payments from customers are typically due within 30 days of invoice date.  When material, we capitalize costs to obtain contracts with customers and amortize them over the expected recovery period.  

Our customer contracts include variable consideration, which is allocated to each distinct month over the contract term based on eligible members and/or member visits each month.  The allocated consideration corresponds directly with the value to our customers of our services completed for the month.  Under the majority of our contracts, we recognize revenue each month using the practical expedient available under ASC 606-10-55-18, which provides that revenue is recognized in the amount for which we have the right to invoice.  ASC 606-10-50-

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14(b) provides an optional exemption, which we have elected to apply, from disclosing remaining performance obligations when revenue is recognized from the satisfaction of the performance obligation in accordance with the “right to invoice” practical expedient.

Although we evaluate our financial performance and make resource allocation decisions based upon the results of our single operating and reportable segment, we believe the following information depicts how our revenues and cash flows from continuing operations are affected by economic factors.  For the year ended December 31, 2021, revenue from our SilverSneakers program, which is predominantly contracted with Medicare Advantage and Medicare Supplement plans, comprised 75% of revenues from continuing operations, while revenue from our Prime Fitness and WholeHealth Living programs comprised 20% and 5%, respectively, of revenues from continuing operations.

Sales and usage-based taxes are excluded from revenues.

Impairment of Intangible Assets and Goodwill

We reviewgoodwillfor impairment at thereportingunitlevel (operatingsegmentor onelevelbelowanoperatingsegment) on an annualbasis (duringthe fourth quarter of our fiscal year) ormore frequently wheneverevents orcircumstances indicatethat the carryingvalue may not be recoverable.  Following the sale of Nutrisystem in December 2020, we have a single reporting unit.

As part of the annual impairment test, we may elect to perform a qualitative assessment to determinewhether it is more likely than not that the fair valueof the reportingunit is less than its carrying value. If we elect not to perform a qualitative assessment or we determine that it is more likely than not that the fair value of the reporting unit is less than its carrying value, we perform a quantitative review.  During the quantitative review, if the estimated fair value of the reporting unit exceeds its carrying amount, no impairment is indicated. If the estimated fair value of the reporting unit is less than its carrying amount, impairment of goodwill is measured as the excess of the carrying amount over fair value.

We review indefinite-lived intangible assets for impairment on an annual basis (during the fourth quarter of our fiscal year) or more frequently whenever events or circumstances indicate that the carrying value may not be recoverable. We estimate the fair value of our indefinite-lived tradename using the relief-from-royalty method, which requires us to estimate significant assumptions such as the long-term growth rates of future revenues associated with the tradename, the royalty rate for such revenue, the terminal growth rate of revenue, the tax rate, and a discount rate.  Changes in these estimates and assumptions could materially affect the estimates of fair value for the tradename.

Key Performance Indicators

In managing our business, we regularly review and analyze a number of key performance indicators (“KPIs”), including revenues, adjusted EBITDA (both in dollars and as a percentage of revenues), and free cash flow.  Adjusted EBITDA and free cash flow are not calculated in accordance with U.S. GAAP (“non-GAAP”).  These KPIs help us monitor our performance, identify trends affecting our business, determine the allocation of resources, and assess the quality and potential variability of our cash flows and earnings.  We believe they are useful to investors in evaluating and understanding our business.COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During 2021, we updated our definitionthe Compensation Committee was composed of adjusted EBITDA as follows: (i) duringMessrs. Karro and Greczyn for the first quarter of 2021 to exclude other (income) expense related to de-designated swaps; (ii) during the second quarter of 2021 to exclude loss on extinguishment and modification of debt; and (iii) during the third quarter of 2021 to exclude other (income) expense related to realized and unrealized gains and losses on our Sharecare Equity Security, as further described in Note 12entire year.  Ms. Jacob was a member of the notes to consolidated financial statements included in this report.  We consider such items to be outsideCommittee from the performance of our ongoing core business operations and believe that presenting Adjusted EBITDA excluding these items provides increased transparency as to the operating costs of our current business performance.  We revised Adjusted EBITDA for 2020 to exclude other (income) expense incurred during the fourth quarter of 2020 related to de-designated swaps; except for this revision, we did not revise prior periods’ Adjusted EBITDA amounts because there were no other costs in the prior periods similar in nature to the items that were newly excluded from Adjusted EBITDA during 2021.

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Additionally, beginning in the fourth quarter of 2020, we revised the definition of free cash flow to exclude settlement on derivatives not designated as hedges, a new item for 2020 that did not exist in prior periods. Settlement on derivatives not designated as hedges arose in 2020 due to the de-designation of certain interest rate swaps in the fourth quarter of 2020 in connection with the repayment of a portion of the principalyear until the 2021 Annual Meeting of Stockholders.  Ms. Russell has been a member of the Committee since the 2021 Annual Meeting of Stockholders. Except for Mr. Greczyn, who served as the interim CEO of the Company from February 2020 through May 2020, none of these persons has at any time been an officer or employee of the Company or any of the Company’s subsidiaries.  In addition, there are no relationships among the Company’s executive officers, members of the Committee or entities whose executives serve on the term loansBoard or the Committee that require disclosure under our Prior Credit Agreement, as further described in Note 14 of the notes to consolidated financial statements included in this report. We believe it is appropriate to exclude settlement on derivatives not designated as hedges from free cash flow because these payments are similar to interest payments (which are reflected in cash flow from operating activities) and they reduce our cash available to repay debt or make other investments.applicable Commission regulations.

Summary Compensation TableBeginning in the third quarter of 2021, we further revised the definition of free cash flow such that it includes proceeds from the sale of equity securities, a new item for 2021 related

The following table provides information regarding compensation to our Sharecare Equity Security that did not exist in prior periods.  We believe it is appropriate to include such proceeds in free cash flow because they are available to be used to support our business.NEOs.